Categorized | happenings, the i.t. files

What digital television really means

In just one more week, all broadcast and cable television will become digital. You’ve heard about it for years. All the hype and hoopla have probably lit a pretty raging fire under your feet to junk your old analog TV and shell out a month or two of salary for one of those wall-sized HD numbers.

But aside from being able to swoon over Bill O’Reilly’s natural beauty in the finest detail, what affect, if any, will digital television have on your business? Especially if you’re a small business or a startup that can only afford television advertising in your wettest dreams?

You’ve heard it here first: a lot.

It’s not going to happen June 13 this year. It’s not going to happen next year. But in a few short years, digital television is going to totally remake the advertising and publicity world. And, like the Internet revolution before it, digital television, once it reaches its full potential, will make it possible for scrappy small businesses and startups to get access to television advertising. And that, my friends, will remake the business and advertising landscape like no revolution before it (with the possible exception of radio).

Digital television has been sold to the American public based on one and only one feature: pixel resolution. We have been promised adamantine precise, crystal-clear pictures and CD-quality sound through the magic of digitization. Hell, we’re already there with our HD sets and Blu-Ray disc players. Digital TV, then, is just the over-the-air version of Blu-Ray, no?

No.

Two key features of digital television stand out. The first is that digital TV can work just like the Internet: every set can be assigned an “address.” The second is that digital TV will eventually mean full-scale two-way communication between the set box and the broadcaster. Even over the air (yep, someone will figure this one out somehow).

“Addressable” TV provides thousands of possibilities to change the way broadcasters and advertisers interface with viewers. It is, to use the classic formulation by Moshe Yudkowsky in The Pebble and the Avalanche, a “disaggregation” that will create a mind-boggling revolution.

What will “addressable” TV disaggregate? The audience.

The current broadcast model essentially throws programming and advertising out to everyone, like throwing a sack of money out the window. By flinging everything out to everyone, broadcasting and the advertisers who support it hope to net a few viewers. They measure these viewers with fairly crude instruments (at least by Internet standards) and are able to extract value from their broadcasting based on these measurements by selling the “audience” to advertisers, who hope that the audience watches their ads.

Addressable TV means that broadcasters and advertisers will now have the ability to measure viewers with pinpoint precision in the aggregate. A total picture with the finest granularity possible. Broadcasting, like so much on the Internet, will become less about throwing shows and ads out the window and more about collecting data about viewers. Digital TV, in other words, has the potential to turn the entire network of TV sets into one giant, interconnected data collection engine delivering incredibly precise and complete information to broadcasters and businesses.

The digital TV revolution is headed to one and only one place: the world’s largest, most thorough data collection machine about individuals and households — their tastes, their preferences, and their habits — ever in human history. (No more porn-on-demand after watching The 700 Club anymore!)

Which means that television advertising will start to look more like direct marketing. Imagine a world where, after a couple years of watching TV, almost every single ad that comes over the the transom is based on consumer intelligence about you (in general) rather than just one ad thrown out the window for everyone?

Think of the current model as throwing shows and ads out a penthouse window down to the crowd below. Digital TV will broadcast at the street level to individuals.

In the current, throw-ads-from-the-penthouse model, businesses can target advertising (and broadcasters can target shows) down to the city level. In a few short years, advertisers may be able to target advertising down to a single household.

Now, think about this from a small business perspective for a moment. Let’s say you do a direct mail campaign. If I told you that, in order to mail out your pitch, you would have to send a letter to every single household in the city you live in, you would probably take a pass before even checking your bank account. I’ve just priced the campaign out of your range. That’s how TV advertising currently works for all the rest of us.

Fortunately for you, mail doesn’t work that way. Unlike television, mail can be as finely granular as a single household. You can, and often do, target individual letters to an individual mailbox, which is far more affordable than having to send a letter out to every household in a large city. So, if you want to pull the trigger on an affordable direct mail campaign, you could send out a pitch letter or postcard to only your current customers. Maybe a few hundred addresses. Again, this is doable on even a shoestring budget.

Right now, the best you can do in targeting a TV ad is as granular as the city level. Digital television will eventually make it possible to target individual households, so you can purchase advertising on, say, on only the TVs of your customers (if you have their address). Buying a spot that is broadcast to only 300 people will suddenly make reaching out to a television audience well within the range of a small business or start-up.

This could create an entire cottage industry of freelancers and small creative agencies, taking advantage of lower production costs because of high-quality digital cameras, cheap editing suites, and comparatively easy special effects applications like AfterEffects, to specialize in quality TV ads for small companies and start-ups. You remember how the Web spawned a million Web design firms in the mid- to late-90′s? Digital TV may do the same for TV advertising.

Sticking with Yudkowsky’s whole “disaggregation” view of revolutions, digital TV will also disaggregate the “time” of broadcasting. In fact, all the major cable companies are hard at work on this revolution.

What does this mean? Cable companies wet their pants when TiVo took off. Many of them, especially Time Warner, set out to replace the TiVo on the top of your set with their own remote service. The cable companies, in other words, want to turn their entire offering into one big, gigantic, remote TiVo box that you access over optical cable.

This means that broadcast television — at least the cable version — is headed towards an interactive model that’s more closely aligned with the Web and the Internet. It will two-way interaction between viewer and broadcaster and, more importantly, offer opportunities for viewers to directly respond to television advertising. Like what you see in an ad? Hit a button on the remote and you’re not at a storefront to purchase that item, send a query, or chat with a sales representative. Or take a survey. Or send a tweet. Or post to Facebook The possibilities are endless.

In the “throw the shows and ads out the window and see who they land on” model that broadcasters currently follow, the entire goal of both shows and ads are to entertain. But in a world where viewers can respond immediately, the goal will be to elicit response. The key metric will not be audience “size,” but audience “response.”

But, get ready. Digital television does offer the promise that you, as a small business or start-up, may be invited to the TV party this time around.

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